How to open and register Sole Proprietorship in India with current bank account.
If you want to start a new online or offline business, sole proprietorship is the best option for you. A sole proprietorship is an unincorporated business owned by 1 person. The owner of a sole proprietorship is known as a sole proprietor. You can start it any day, any time. When your business grows you can then turn it into Partnership, LLP or a Company.
As a sole proprietor, you can operate the business under your own name or under a trade/firm name or your website’s name. e.g. Let’s say you are an Manpower consultant, you can operate the business under your own name “Varun Manpower Consultants” or under a trade/firm name “ABC Manpower Solutions”.
Key Features of Proprietorship Firm
- 1 Person Required as Single Entrepreneur.
- Single Owner of the Business.
- Easy to Start and Easy to Close.
- Complete Control.
- Lower Cost of Formation and Compliance.
Disadvantages of Proprietorship Firm
- Lack of Resources.
- Unlimited Liability.
- Lack of Credibility.
- Can not raise funds easily.
- Can not add Partners.
How to open a current bank account for my proprietorship
If you want to open a current bank account under your trade name “ABC Manpower Solutions” you will need the following things :
1) Service tax registration or Sales Tax or VAT registration or Shop Establishment license.
Note: If you are a service provider, you need just service tax registration but for selling/trading of goods you will have to go for sales/vat/ registration or shop license
2) Letter from a Chartered Accountant (CA) regarding the nature of your business.
3) Letterhead with the firm’s name and address.
4) Stamp Paper in the name of the Proprietorship.
5) Address and ID Proof of the proprietor. If proprietorship address is different then you will also need office premise address proof.
So as per convenience of the readers we can divide business in to two Categories.
a) Services Providers b)Manufacturing/Sales/Trading Business
a) Service Based Business –
These type Business are providing services Online and Offline to users. Example are – Website Development/Digital Marketing/Consulting/Tickets and Hotel Bookings/Classifieds Websites or any other type of business which providing the services.
So to open a current bank account you needs :
- Service Tax Certification
- Chartered Accountant Certification regarding nature of business. (Required by some private banks)
Note :- Service Tax Registration Certification not means that you have to charge the service tax from starting.
Must Read : How to Apply for Service Tax Registration
b) Manufacturing/Sales/Trading Business –
These type Business are selling any product to customers through own website or offline. They are selling VAT applicable products to consumer so these type startups fall in this category.
So as a Trader/Seller/Manufacturer we may require to open a current account in to Bank –
- VAT/Sales TAX/TIN Registration.
- Shop Act License ( In the Maharashtra or Gujarat its called Gumasta and in WB State its called Trade License)
Note – In the starting you can apply for the Shop act license to save the expenses on the VAT/CST.
VAT Registration is State wise so it’s Procedure very state to state.
Common Documents Required in Both above cases register as Proprietorship Firm :-
- ID and Address Proof as Pan Card/Passport/Voter ID/Aadhar Card/Driving License Copy of the Proprietor.
- One Business Place Address proof :-
- If Property on Rented :- Need Rent Agreement and NOC from Landlord.
- If Property is own :- Need Electricity Bills or any other Address Proof.
Note : Proprietor Business place and home place can be same
- Note : In Some State Security Amount or Surety is not applicable like in Delhi but in Most of the State its applicable and FD Amount or Guaranteed Amount Very as State wise Rules and Regulations.
How to Register Proprietorship Firm Online ?
a) For the Service Tax Registration user can apply yourself via Online Procedure but problem is user have to submitted physically basic documents and professional documents in the department. so we recommend take the help from a expert of MyBizz Consultants Private Limited now.
Must Read : Service Tax Registrations Forms for Proprietorship Firm
b) For the VAT/CS Registration or Shop Act License in some of the states user can apply online but again problem is during the psychical verification officers takes the bribe or raise the issues. So we recommend to take the help from an expert of MyBizz Consultants Private Limited.